BILL NUMBER: AB 2257	CHAPTERED  09/19/00

	CHAPTER   517
	FILED WITH SECRETARY OF STATE   SEPTEMBER 19, 2000
	APPROVED BY GOVERNOR   SEPTEMBER 17, 2000
	PASSED THE ASSEMBLY   AUGUST 21, 2000
	PASSED THE SENATE   AUGUST 10, 2000
	AMENDED IN SENATE   JUNE 29, 2000
	AMENDED IN ASSEMBLY   MAY 4, 2000

INTRODUCED BY   Assembly Member Aroner

                        FEBRUARY 24, 2000

   An act to amend Sections 15432, 15438, 15438.5, 15439, and 15440
of, and to repeal Sections 15438.1, 15461, and 15463 of, the
Government Code, and to amend Section 127300 of the Health and Safety
Code, relating to health facility financing, and making an
appropriation therefor.



	LEGISLATIVE COUNSEL'S DIGEST


   AB 2257, Aroner.  Health facility financing.
   Under existing law, the California Health Facilities Financing
Authority Act, there is a California Health Facilities Financing
Authority that is empowered to make loans under certain conditions
from the continuously appropriated California Health Facilities
Financing Authority Fund to nonprofit corporations or associations
for financing or refinancing of the acquisition, construction, or
remodeling of health facilities, as defined, including hospitals.
   Existing law authorizes the authority to issue revenue bonds for
certain purposes.
   This bill would define revenue bonds for those purposes.
   Existing law provides that no project shall be eligible for
approval under the California Health Facilities Financing Authority
Act unless a certificate of need has first been obtained, a
certificate of exemption has been obtained, or the project is exempt
from certification of need or exemption review and approval, and
suspends that requirement.
   This bill would repeal that provision, and would make conforming
changes.
   This bill would revise statutory authority to issue revenue bonds
under the California Health Facilities Financing Authority Act.
   Existing law authorizes the authority to pledge any of the money
in the continuously appropriated fund as security for payment of the
principal and interest of any particular issuance of bonds under the
California Health Facilities Financing Authority Act.
   This bill would extend that statutory authorization to include the
pledge of money in the fund to include certain secured or unsecured
loans.  Because the bill would expand the purposes for which a
continuously appropriated fund may be used, the bill would make an
appropriation.
   Existing law limits the expenses the authority may incur in
carrying out the California Health Facilities Financing Authority
Act, with the exception of expenses for the initial organization and
operation of the authority.
   This bill would repeal that exception.
   Existing law specifies the uses for a specified portion of the
initial amount of bonds outstanding under the California Health
Facilities Financing Authority Act.
   This bill would repeal that provision.
   Existing law provides for the continuously appropriated County
Health Facilities Financing Assistance Fund, and authorizes the use
of money in the fund to provide assistance to counties to pay the
debt service on loans for, or otherwise assist, in the financing of
certain facilities.
   This bill would delete that fund.
   This bill would incorporate additional changes to Section 15438 of
the Government Code, proposed by AB 2875, to be operative only if AB
2875 and this bill are both enacted and become effective on or
before January 1, 2001, and this bill is enacted last.
   Appropriation:  yes.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:


  SECTION 1.  Section 15432 of the Government Code is amended to
read:
   15432.  As used in this part, the following words and terms shall
have the following meanings, unless the context clearly indicates or
requires another or different meaning or intent:
   (a) "Act" means the California Health Facilities Financing
Authority Act.
   (b) "Authority" means the California Health Facilities Financing
Authority created by this part or any board, body, commission,
department, or officer succeeding to the principal functions thereof
or to which the powers conferred upon the authority by this part
shall be given by law.
   (c) "Cost," as applied to a project or portion of a project
financed under this part, means and includes all or any part of the
cost of construction and acquisition of all lands, structures, real
or personal property, rights, rights-of-way, franchises, easements,
and interests acquired or used for a project, the cost of demolishing
or removing any buildings or structures on land so acquired,
including the cost of acquiring any lands to which those buildings or
structures may be moved, the cost of all machinery and equipment,
financing charges, interest prior to, during, and for a period not to
exceed the later of one year or one year following completion of
construction, as determined by the authority, the cost of funding or
financing noncapital expenses, reserves for principal and interest
and for extensions, enlargements, additions, replacements,
renovations and improvements, the cost of engineering, reasonable
financial and legal services, plans, specifications, studies,
surveys, estimates, administrative expenses, and other expenses of
funding or financing or necessary or incident to determining the
feasibility of constructing, any project or incident to the
construction or acquisition or financing of any project.
   (d) "Health facility" means any facility, place, or building which
is organized, maintained, and operated for the diagnosis, care,
prevention, and treatment of human illness, physical or mental, or
developmental disability, including convalescence and rehabilitation
and including care during and after pregnancy, or for any one or more
of these purposes, for one or more persons, to which the persons are
admitted for a 24-hour stay or longer, except in the cases of county
outpatient facilities, adult day care facilities, as defined under
paragraph (2) of subdivision (a) of Section 1502 of the Health and
Safety Code, which provide services to developmentally disabled or
mentally impaired persons, community clinics, as defined in paragraph
(6), and child day care facilities, as defined in paragraph (10),
and includes all of the following types:
   (1) A general acute care hospital which is a health facility
having a duly constituted governing body with overall administrative
and professional responsibility and an organized medical staff which
provides 24-hour inpatient care, including the following basic
services:  medical, nursing, surgical, anesthesia, laboratory,
radiology, pharmacy, and dietary services.
   (2) An acute psychiatric hospital which is a health facility
having a duly constituted governing body with overall administrative
and professional responsibility and an organized medical staff which
provides 24-hour inpatient care for mentally disordered, incompetent,
or other patients referred to in Division 5 (commencing with Section
5000) or Division 6 (commencing with Section 6000) of the Welfare
and Institutions Code, including the following basic services:
medical, nursing, rehabilitative, pharmacy, and dietary services.
   (3) A skilled nursing facility which is a health facility which
provides the following basic services:  skilled nursing care and
supportive care to patients whose primary need is for availability or
skilled nursing care on an extended basis.
   (4) An intermediate care facility which is a health facility which
provides the following basic services:  inpatient care to ambulatory
or semiambulatory patients who have recurring need for skilled
nursing supervision and need supportive care, but who do not require
availability or continuous skilled nursing care.
   (5) A special health care facility which is a health facility
having a duly constituted governing body with overall administrative
and professional responsibility and an organized medical or dental
staff which provides inpatient or outpatient, acute or nonacute care,
including, but not limited to, medical, nursing, rehabilitation,
dental, or maternity.
   (6) A community clinic which is a clinic operated by a tax-exempt
nonprofit corporation which is supported and maintained in whole or
in part by donations, bequests, gifts, grants, government funds or
contributions, which may be in the form of money, goods, or services.
  In a community clinic, any charges to the patient shall be based on
the patient's ability to pay, utilizing a sliding fee scale.  No
corporation other than a nonprofit corporation, exempt from federal
income taxation under paragraph (3) of subsection (c) of Section 501
of the Internal Revenue Code of 1954 as amended, or a statutory
successor thereof, shall operate a community clinic.  However, the
licensee of any community clinic so licensed on September 26, 1978,
shall not be required to obtain tax-exempt status under either
federal or state law.  No natural person or persons shall operate a
community clinic.
   (7) An adult day health center which is a facility, as defined
under subdivision (b) of Section 1570.7 of the Health and Safety
Code, which provides adult day health care, as defined under
subdivision (a) of Section 1570.7 of the Health and Safety Code.
   (8) Any other type of facility for the provision of inpatient or
outpatient care which is a county health facility, as defined in
subdivision (a) of Section 16715 of the Welfare and Institutions
Code, (without regard to whether funding is provided for the facility
under that section).
   (9) A multilevel facility is an institutional arrangement where a
residential facility for the elderly is operated as a part of, or in
conjunction with, an intermediate care facility, a skilled nursing
facility, or a general acute care hospital.  "Elderly," for the
purposes of this paragraph, means a person 62 years of age or older.

   (10) A child day care facility operated in conjunction with a
health facility.  A child day care facility is a facility, as defined
in Section 1596.750 of the Health and Safety Code.  For purposes of
this paragraph, "child" means a minor from birth to 18 years of age.

   (11) An intermediate care facility/developmentally disabled
habilitative which is a health facility, as defined under subdivision
(e) of Section 1250 of the Health and Safety Code.
   (12) An intermediate care facility/developmentally
disabled-nursing which is a health facility, as defined under
subdivision (h) of Section 1250 of the Health and Safety Code.
   (13) A community care facility which is a facility, as defined
under subdivision (a) of Section 1502 of the Health and Safety Code,
which provides care, habilitation, rehabilitation, or treatment
services to developmentally disabled or mentally impaired persons.
   (14) A nonprofit community care facility, as defined in
subdivision (a) of Section 1502 of the Health and Safety Code, other
than a facility which, as defined in that subdivision, is a
residential facility for the elderly, a foster family agency, a
foster family home, a full service adoption agency, or a noncustodial
adoption agency.
   (15) A nonprofit accredited community work-activity program, as
specified in subdivision (e) of Section 19352 and Section 19355 of
the Welfare and Institutions Code.
   (16) A community mental health center, as defined in paragraph (3)
of subdivision (b) of Section 5667 of the Welfare and Institutions
Code.
   "Health facility" includes a clinic which is described in
subdivision (l) of Section 1206 of the Health and Safety Code.
   "Health facility" includes the following facilities, if operated
in conjunction with one or more of the above types of facilities:  a
laboratory, laundry, nurses or interns residence, housing for staff
or employees and their families, patients or relatives of patients,
physicians' facility, administration building, research facility,
maintenance, storage, or utility facility and all structures or
facilities related to any of the foregoing or required or useful for
the operation of a health facility, and the necessary and usual
attendant and related facilities and equipment and including parking
and supportive service facilities or structures required or useful
for the orderly conduct of such health facility.
   "Health facility" does not include any institution, place, or
building used or to be used primarily for sectarian instruction or
study or as a place for devotional activities or religious worship.
   (e) "Participating health institution" means a city, city and
county, county, a district hospital, or a private nonprofit
corporation or association authorized by the laws of this state to
provide or operate a health facility and which, pursuant to the
provisions of this part, undertakes the financing or refinancing of
the construction or acquisition of a project or of working capital as
provided in this part.
   (f) "Project" means construction, expansion, remodeling,
renovation, furnishing, or equipping, or funding or financing of a
health facility or acquisition of a health facility to be financed or
refinanced with funds provided in whole or in part pursuant to this
part.  "Project" may include any combination of one or more of the
foregoing undertaken jointly by any participating health institution
with one or more other participating health institutions.
   (g) "Revenue bond" means any bond, warrant, note, lease, or
installment sale obligation that is evidenced by a certificate of
participation or other evidence of indebtedness issued by the
authority.
   (h) "Working capital" means moneys to be used by, or on behalf of,
a participating health institution to pay or prepay maintenance or
operation expenses or any other costs that would be treated as an
expense item, under generally accepted accounting principles, in
connection with the ownership or operation of a health facility,
including, but not limited to, reserves for maintenance or operation
expenses, interest for not to exceed one year on any loan for working
capital made pursuant to this part, and reserves for debt service
with respect to, and any costs necessary or incidental to, that
financing.
  SEC. 2.  Section 15438 of the Government Code is amended to read:
   15438.  The authority may do any of the following:
   (a) Adopt bylaws for the regulation of its affairs and the conduct
of its business.
   (b) Adopt an official seal.
   (c) Sue and be sued in its own name.
   (d) Receive and accept from any agency of the United States or any
agency of the State of California or any municipality, county or
other political subdivision thereof, or from any individual,
association, or corporation gifts, grants, or donations of moneys for
achieving any of the purposes of this chapter.
   (e) Engage the services of private consultants to render
professional and technical assistance and advice in carrying out the
purposes of this part.
   (f) Determine the location and character of any project to be
financed under this part, and to acquire, construct, enlarge,
remodel, renovate, alter, improve, furnish, equip, fund, finance,
own, maintain, manage, repair, operate, lease as lessee or lessor and
regulate the same, to enter into contracts for any or all of those
purposes, to enter into contracts for the management and operation of
a project or other health facilities owned by the authority, and to
designate a participating health institution as its agent to
determine the location and character of a project undertaken by that
participating health institution under this chapter and as the agent
of the authority, to acquire, construct, enlarge, remodel, renovate,
alter, improve, furnish, equip, own, maintain, manage, repair,
operate, lease as lessee or lessor and regulate the same, and as the
agent of the authority, to enter into contracts for any or all of
those purposes, including contracts for the management and operation
of that project or other health facilities owned by the authority.
   (g) Acquire, directly or by and through a participating health
institution as its agent, by purchase solely from funds provided
under the authority of this part, or by gift or devise, and to sell,
by installment sale or otherwise, any lands, structures, real or
personal property, rights, rights-of-way, franchises, easements, and
other interests in lands, including lands lying under water and
riparian rights, which are located within the state the authority
determines necessary or convenient for the acquisition, construction,
or financing of a health facility or the acquisition, construction,
financing, or operation of a project, upon the terms and at the
prices considered by the authority to be reasonable and which can be
agreed upon between the authority and the owner thereof, and to take
title thereto in the name of the authority or in the name of a
participating health institution as its agent.
   (h) Receive and accept from any source loans, contributions, or
grants for, or in aid of, the construction, financing, or refinancing
of a project or any portion of a project in money, property, labor,
or other things of value.
   (i) Make secured or unsecured loans to, or purchase secured or
unsecured loans of, any participating health institution in
connection with the financing of a project or working capital in
accordance with an agreement between the authority and the
participating health institution.  However, no loan to finance a
project shall exceed the total cost of the project, as determined by
the participating health institution and approved by the authority.
Funds for secured loans may be provided from the California Health
Facilities Financing Fund pursuant to subdivision (b) of Section
15439 to small or rural health facilities pursuant to authority
guidelines.
   (j) Make secured or unsecured loans to, or purchase secured or
unsecured loans of, any participating health institution in
accordance with an agreement between the authority and the
participating health institution to refinance indebtedness incurred
by that participating health institution in connection with projects
undertaken or for health facilities acquired or for working capital.
Funds for secured loans may be provided from the California Health
Facilities Financing Fund pursuant to subdivision (b) of Section
15439 to small or rural health facilities pursuant to authority
guidelines.
   (k) Mortgage all or any portion of interest of the authority in a
project or other health facilities and the property on which that
project or other health facilities are located, whether owned or
thereafter acquired, including the granting of a security interest in
any property, tangible or intangible, and to assign or pledge all or
any portion of the interests of the authority in mortgages, deeds of
trust, indentures of mortgage or trust or similar instruments,
notes, and security interests in property, tangible or intangible, of
participating health institutions to which the authority has made
loans, and the revenues therefrom, including payments or income from
any thereof owned or held by the authority, for the benefit of the
holders of bonds issued to finance the project or health facilities
or issued to refund or refinance outstanding indebtedness of
participating health institutions as permitted by this part.
   (l) Lease to a participating health institution the project being
financed or other health facilities conveyed to the authority in
connection with that financing, upon the terms and conditions the
authority determines proper, and to charge and collect rents therefor
and to terminate the lease upon the failure of the lessee to comply
with any of the obligations of the lease; and to include in that
lease, if desired, provisions granting the lessee options to renew
the term of the lease for the period or periods and at the rent, as
determined by the authority, to purchase any or all of the health
facilities or that upon payment of all of the indebtedness incurred
by the authority for the financing of that project or health
facilities or for refunding outstanding indebtedness of a
participating health institution, then the authority may convey any
or all of the project or the other health facilities to the lessee or
lessees thereof with or without consideration.
   (m) Charge and equitably apportion among participating health
institutions, the administrative costs and expenses incurred by the
authority in the exercise of the powers and duties conferred by this
part.
   (n) Obtain, or aid in obtaining, from any department or agency of
the United States or of the State of California or any private
company, any insurance or guarantee as to, or of, or for the payment
or repayment of, interest or principal, or both, or any part thereof,
on any loan, lease, or obligation, or any instrument evidencing or
securing the loan, lease, or obligation, made or entered into
pursuant to this part; and notwithstanding any other provisions of
this part, to enter into any agreement, contract, or any other
instrument whatsoever with respect to that insurance or guarantee, to
accept payment in the manner and form as provided therein in the
event of default by a participating health institution, and to assign
that insurance or guarantee as security for the authority's bonds.
   (o) Enter into any and all agreements or contracts, including
agreements for liquidity and credit enhancement, interest rate swaps
or hedges, execute any and all instruments, and do and perform any
and all acts or things necessary, convenient, or desirable for the
purposes of the authority or to carry out any power expressly granted
by this part.
   (p) Invest any moneys held in reserve or sinking funds, or any
moneys not required for immediate use or disbursement, at the
discretion of the authority, in any obligations authorized by the
resolution authorizing the issuance of the bonds secured thereof or
authorized by law for the investment of trust funds in the custody of
the Treasurer.
  SEC. 2.5.  Section 15438 of the Government Code is amended to read:

   15438.  The authority may do any of the following:
   (a) Adopt bylaws for the regulation of its affairs and the conduct
of its business.
   (b) Adopt an official seal.
   (c) Sue and be sued in its own name.
   (d) Receive and accept from any agency of the United States or any
agency of the State of California or any municipality, county or
other political subdivision thereof, or from any individual,
association, or corporation gifts, grants, or donations of moneys for
achieving any of the purposes of this chapter.
   (e) Engage the services of private consultants to render
professional and technical assistance and advice in carrying out the
purposes of this part.
   (f) Determine the location and character of any project to be
financed under this part, and to acquire, construct, enlarge,
remodel, renovate, alter, improve, furnish, equip, fund, finance,
own, maintain, manage, repair, operate, lease as lessee or lessor and
regulate the same, to enter into contracts for any or all of those
purposes, to enter into contracts for the management and operation of
a project or other health facilities owned by the authority, and to
designate a participating health institution as its agent to
determine the location and character of a project undertaken by that
participating health institution under this chapter and as the agent
of the authority, to acquire, construct, enlarge, remodel, renovate,
alter, improve, furnish, equip, own, maintain, manage, repair,
operate, lease as lessee or lessor and regulate the same, and as the
agent of the authority, to enter into contracts for any or all of
those purposes, including contracts for the management and operation
of that project or other health facilities owned by the authority.
   (g) Acquire, directly or by and through a participating health
institution as its agent, by purchase solely from funds provided
under the authority of this part, or by gift or devise, and to sell,
by installment sale or otherwise, any lands, structures, real or
personal property, rights, rights-of-way, franchises, easements, and
other interests in lands, including lands lying under water and
riparian rights, which are located within the state the authority
determines necessary or convenient for the acquisition, construction,
or financing of a health facility or the acquisition, construction,
financing, or operation of a project, upon the terms and at the
prices considered by the authority to be reasonable and which can be
agreed upon between the authority and the owner thereof, and to take
title thereto in the name of the authority or in the name of a
participating health institution as its agent.
   (h) Receive and accept from any source loans, contributions, or
grants for, or in aid of, the construction, financing, or refinancing
of a project or any portion of a project in money, property, labor,
or other things of value.
   (i) Make secured or unsecured loans to, or purchase secured or
unsecured loans of, any participating health institution in
connection with the financing of a project or working capital in
accordance with an agreement between the authority and the
participating health institution.  However, no loan to finance a
project shall exceed the total cost of the project, as determined by
the participating health institution and approved by the authority.
Funds for secured loans may be provided from the California Health
Facilities Financing Fund pursuant to subdivision (b) of Section
15439 to small or rural health facilities pursuant to authority
guidelines.
   (j) Make secured or unsecured loans to, or purchase secured or
unsecured loans of, any participating health institution in
accordance with an agreement between the authority and the
participating health institution to refinance indebtedness incurred
by that participating health institution in connection with projects
undertaken or for health facilities acquired or for working capital .
  Funds for secured loans may be provided from the California Health
Facilities Financing Fund pursuant to subdivision (b) of Section
15439 to small or rural health facilities pursuant to authority
guidelines.
   (k) Mortgage all or any portion of interest of the authority in a
project or other health facilities and the property on which that
project or other health facilities are located, whether owned or
thereafter acquired, including the granting of a security interest in
any property, tangible or intangible, and to assign or pledge all or
any portion of the interests of the authority in mortgages, deeds of
trust, indentures of mortgage or trust or similar instruments,
notes, and security interests in property, tangible or intangible, of
participating health institutions to which the authority has made
loans, and the revenues therefrom, including payments or income from
any thereof owned or held by the authority, for the benefit of the
holders of bonds issued to finance the project or health facilities
or issued to refund or refinance outstanding indebtedness of
participating health institutions as permitted by this part.
   (l) Lease to a participating health institution the project being
financed or other health facilities conveyed to the authority in
connection with that financing, upon the terms and conditions the
authority determines proper, and to charge and collect rents therefor
and to terminate the lease upon the failure of the lessee to comply
with any of the obligations of the lease; and to include in that
lease, if desired, provisions granting the lessee options to renew
the term of the lease for the period or periods and at the rent, as
determined by the authority, to purchase any or all of the health
facilities or that upon payment of all of the indebtedness incurred
by the authority for the financing of that project or health
facilities or for refunding outstanding indebtedness of a
participating health institution, then the authority may convey any
or all of the project or the other health facilities to the lessee or
lessees thereof with or without consideration.
   (m) Charge and equitably apportion among participating health
institutions, the administrative costs and expenses incurred by the
authority in the exercise of the powers and duties conferred by this
part.
   (n) Obtain, or aid in obtaining, from any department or agency of
the United States or of the State of California or any private
company, any insurance or guarantee as to, or of, or for the payment
or repayment of, interest or principal, or both, or any part thereof,
on any loan, lease, or obligation, or any instrument evidencing or
securing the loan, lease, or obligation, made or entered into
pursuant to this part; and notwithstanding any other provisions of
this part, to enter into any agreement, contract, or any other
instrument whatsoever with respect to that insurance or guarantee, to
accept payment in the manner and form as provided therein in the
event of default by a participating health institution, and to assign
that insurance or guarantee as security for the authority's bonds.
   (o) Enter into any and all agreements or contracts, including
agreements for liquidity and credit enhancement, interest rate swaps
or hedges, execute any and all instruments, and do and perform any
and all acts or things necessary, convenient, or desirable for the
purposes of the authority or to carry out any power expressly granted
by this part.
   (p) Invest any moneys held in reserve or sinking funds, or any
moneys not required for immediate use or disbursement, at the
discretion of the authority, in any obligations authorized by the
resolution authorizing the issuance of the bonds secured thereof or
authorized by law for the investment of trust funds in the custody of
the Treasurer.
   (q) Award grants to any eligible clinic pursuant to Section
15438.6.
  SEC. 3.  Section 15438.1 of the Government Code is repealed.
  SEC. 4.  Section 15438.5 of the Government Code is amended to read:

   15438.5.  (a) It is the intent of the Legislature in enacting this
part to provide financing only, and, except as provided in
subdivisions (b), (c), and (d), only to health facilities which can
demonstrate the financial feasibility of their projects without
regard to the more favorable interest rates anticipated through the
issuance of revenue                                          bonds
under this part.  It is further the intent of the Legislature that
all or part of any savings experienced by a participating health
institution, as a result of that tax-exempt revenue bond funding, be
passed on to the consuming public through lower charges or
containment of the rate of increase in hospital rates.  It is not the
intent of the Legislature in enacting this part to encourage
unneeded health facility construction.  Further, it is not the intent
of the Legislature to authorize the authority to control or
participate in the operation of hospitals, except where default
occurs or appears likely to occur.
   (b) When determining the financial feasibility of projects for
county health facilities, the authority shall consider the more
favorable interest rates reasonably anticipated through the issuance
of revenue bonds under this part.  It is the intent of the
Legislature that the authority attempt in whatever ways possible to
assist counties to arrange projects which will meet the financial
feasibility standards developed under this part.
   (c) The authority may issue revenue bonds pursuant to this part to
finance the development of a multilevel facility, or any portion of
a multilevel facility, including the portion licensed as a
residential facility for the elderly, if the skilled nursing
facility, intermediate care facility, or general acute care hospital
is operated or provided by an eligible participating health
institution.
   (d) If a health facility seeking financing for a project pursuant
to this part does not meet the guidelines established by the
authority with respect to bond rating, the authority may nonetheless
give special consideration, on a case-by-case basis, to financing the
project if the health facility demonstrates to the satisfaction of
the authority the financial feasibility of the project, and the
performance of significant community service.  For the purposes of
this part, a health facility which performs a significant community
service is one that contracts with Medi-Cal or that can demonstrate,
with the burden of proof being on the health facility, that it has
fulfilled at least two of the following criteria:
   (1) On or before January 1, 1991, has established, and agrees to
maintain, a 24-hour basic emergency medical service open to the
public with a physician and surgeon on duty, or is a children's
hospital as defined in Section 14087.21 of the Welfare and
Institutions Code, which jointly provides basic or comprehensive
emergency services in conjunction with another licensed hospital.
This criterion shall not be utilized in a circumstance where a small
and rural hospital, as defined in Section 442.2 of the Health and
Safety Code, has not established a 24-hour basic emergency medical
service with a physician and surgeon on duty; or will operate a
designated trauma center on a continuing basis during the life of the
revenue bonds issued by the authority.
   (2) Has adopted, and agrees to maintain on a continuing basis
during the life of the revenue bonds issued by the authority, a
policy, approved and recorded by the facility's board of directors,
of treating all patients without regard to ability to pay, including,
but not limited to, emergency room walk-in patients.
   (3) Has provided and agrees to provide care, on a continuing basis
during the life of the revenue bonds issued by the authority, to
Medi-Cal and uninsured patients in an amount not less than 5 percent
of the facility's adjusted inpatient days as reported on an annual
basis to the Office of Statewide Health Planning and Development.
   (4) Has budgeted at least 5 percent of its net operating income to
meeting the medical needs of uninsured patients and to providing
other services, including, but not limited to, community education,
primary care outreach in ambulatory settings, and unmet nonmedical
needs, such as food, shelter, clothing, or transportation for
vulnerable populations in the community, and agrees to continue that
policy during the life of the revenue bonds issued by the authority.

   On or before January 1, 1992, the authority shall report to the
Legislature regarding the implementation of this subdivision.  The
report shall provide information on the number of applications for
financing sought under this subdivision, the number of applications
approved and denied under this subdivision, and a brief summary of
the reason for any denial of an application submitted under this
subdivision.
   (e) Enforcement of the conditions under which the authority issues
bonds pursuant to this section shall be governed by the enforcement
conditions under Section 15459.4.
  SEC. 5.  Section 15439 of the Government Code is amended to read:
   15439.  (a) The California Health Facilities Authority Fund is
continued in existence in the State Treasury as the California Health
Facilities Financing Authority Fund.  All money in the fund is
hereby continuously appropriated to the authority for carrying out
the purposes of this division.  The authority may pledge any or all
of the moneys in the fund as security for payment of the principal
of, and interest on, any particular issuance of bonds issued pursuant
to this part, or any particular secured or unsecured loan made
pursuant to subdivision (i) or (j) of Section 15438, and, for that
purpose or as necessary or convenient to the accomplishment of any
other purpose of the authority, may divide the fund into separate
accounts.  All moneys accruing to the authority pursuant to this part
from whatever source shall be deposited in the fund.
   (b) Subject to the priorities which may be created by the pledge
of particular moneys in the fund to secure any issuance of bonds of
the authority, and subject further to the cost of loans provided by
the authority pursuant to subdivisions (i) and (j) of Section 15438,
and subject further to any reasonable costs which may be incurred by
the authority in administering the program authorized by this
division, all moneys in the fund derived from any source shall be
held in trust for the security and payment of bonds of the authority
and shall not be used or pledged for any other purpose so long as
such bonds are outstanding and unpaid.  However, nothing in this
section shall limit the power of the authority to make loans with the
proceeds of bonds in accordance with the terms of the resolution
authorizing the same.
   (c) Pursuant to any agreements with the holders of particular
bonds pledging any particular assets, revenues, or moneys, the
authority may create separate accounts in the fund to manage assets,
revenues, or moneys in the manner set forth in the agreements.
   (d) The authority may, from time to time, direct the State
Treasurer to invest moneys in the fund which are not required for its
current needs, including proceeds from the sale of any bonds, in the
eligible securities specified in Section 16430 as the agency shall
designate.  The authority may direct the State Treasurer to deposit
moneys in interest-bearing accounts in state or national banks or
other financial institutions having principal offices in this state.
The authority may alternatively require the transfer of moneys in
the fund to the Surplus Money Investment Fund for investment pursuant
to Article 4 (commencing with Section 16470) of Chapter 3 of Part 2
of Division 4.  All interest or other increment resulting from an
investment or deposit shall be deposited in the fund, notwithstanding
Section 16305.7.  Moneys in the fund shall not be subject to
transfer to any other fund pursuant to any provision of Part 2
(commencing with Section 16300) of Division 4, excepting the Surplus
Money Investment Fund.
   (e) All moneys accruing to the authority from whatever source
shall be deposited in the fund.
  SEC. 6.  Section 15440 of the Government Code is amended to read:
   15440.  All expenses of the authority incurred in carrying out the
provisions of this part shall be payable solely from funds provided
pursuant to this part, and no liability shall be incurred by the
authority beyond the extent to which moneys shall have been provided
under this part.
  SEC. 7.  Section 15461 of the Government Code is repealed.
  SEC. 8.  Section 15463 of the Government Code is repealed.
  SEC. 9.  Section 127300 of the Health and Safety Code is amended to
read:
   127300.  Notwithstanding any other provision of law, on and after
January 1, 1987, the requirement that health facilities and specialty
clinics apply for, and obtain, certificates of need or certificates
of exemption is indefinitely suspended.
  SEC. 10.  Section 2.5 of this bill incorporates amendments to
Section 15438 of the Government Code proposed by both this bill and
AB 2875.  It shall only become operative if (1) both bills are
enacted and become effective on or before January 1, 2001, (2) each
bill amends Section 15438 of the Government Code, and (3) this bill
is enacted after AB 2875, in which case Section 2 of this bill shall
not become operative.
